2023 (3) TMI 1012 - AT - Service Tax

Levy of Service Tax - renting of vacant land surrounded by boundary wall - tax paid on service of renting beyond one year from the relevant date is time barred under Section 11A or not - refund of service tax paid on vacant land is hit by mischief of unjust enrichment or not. Whether renting of vacant land is taxable under the category of Renting of Immovable Property Service? - HELD THAT - From the definition of renting of immovable property, it can be seen that a vacant land has been excluded from the term Immovable Property . It clearly justifies that even though such vacant land having facilities merely incidental to the use of such vacant land also falls under the exclusion category. As per the facts of the present case, on the vacant land there is only boundary wall which can be categorized as a facility incidental to use of such vacant land therefore, even though the land is surrounded by boundary wall, it fall under the term Vacant land provided in the definition of immovable property therefore, as per the facts of the present case, the vacant land is not liable for service tax being excluded from definition of immovable property. Refund of service tax paid on such vacant land - limitation under Section 11B - unjust enrichment - HELD THAT - As regard the time limit, the submission of the appellant is that the amount paid is not a service tax as there was no statutory levy on the vacant land therefore, the amount which was paid will not be governed for refund under Section 11B therefore, the limitation of one year provided under Section 11B shall also not apply mutatis mutandis - the appellant have admittedly paid the service tax under the head of service tax of renting of immovable property service and the same was declared in the ST-3 returns as payment of service tax. In this fact, since the amount was admittedly paid as service tax, the refund of service tax shall be governed by Section 11B. The appellant have considered the gross rent as cum tax amount and while paying service tax to arrive at the taxable value, the service tax was excluded which shows that the service tax which was paid by the appellant was included in the gross renting recovered by the appellant if this be so, it is clear evidence that the incidence of the service tax paid by the appellant has been passed on to the service recipient for the reason that the gross amount collected from the service recipient includes the service tax amount also - the appellant is not entitle for the refund. Appeal dismissed.

Issues Involved:
1. Whether the renting of vacant land surrounded by a boundary wall is liable for service tax.
2. Whether the tax paid on the service of renting beyond one year from the relevant date is time-barred under Section 11A.
3. Whether the refund of service tax paid on vacant land is hit by the mischief of unjust enrichment.

Summary:

Issue 1: Renting of Vacant Land and Service Tax Liability
The Tribunal analyzed whether renting vacant land surrounded by a boundary wall falls under the category of "Renting of Immovable Property Service" as per Sub-section (90a) of Section 65 of the Finance Act, 1994. The definition excludes vacant land from the term "Immovable Property." The Tribunal concluded that the presence of a boundary wall is merely incidental and does not change the character of the land as vacant. Therefore, the vacant land is not liable for service tax.

Issue 2: Time-Barred Refund under Section 11B
Regarding the refund of service tax paid on vacant land, the appellant argued that since there was no statutory levy on vacant land, the amount paid should not be considered service tax, and thus, Section 11B's one-year limitation should not apply. The Tribunal found that the appellant had declared the payment as service tax in their ST-3 returns. Therefore, the refund claim must comply with Section 11B, making the refund for the period beyond one year time-barred. The Tribunal relied on the jurisdictional High Court's judgment in the case of Patel Construction Company, which held that condoning the delay in filing a refund claim is contrary to statutes.

Issue 3: Unjust Enrichment
The Tribunal examined whether the refund claim was hit by unjust enrichment. The appellant had included the service tax in the gross rent collected from the service recipient, indicating that the incidence of the service tax was passed on to the service recipient. Thus, the refund claim was rightly rejected on the ground of unjust enrichment.

Conclusion
The Tribunal upheld the impugned order and dismissed the appeal, concluding that the appellant is not entitled to the refund of service tax paid on the vacant land. The judgment was pronounced in the open court on 22.03.2023.

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